E-businesses tap into fresh food sector

Customers buy king crabs at Hema Xiansheng, a fresh food chain backed by Alibaba Group Holding Ltd. The store opened in Hangzhou, capital of East China's Zhejiang province, on Sept 28, 2017.

New supermarket operating model could reshape China's shopping scene

Zhang Hui, a clerk working at a technology company in Yizhuang, a southern suburb of Beijing, likes to go straight from work to a newly opened fresh food supermarket－7Fresh－where she chooses her favorite seafood dish, say, lobster or crab.

She doesn't take the food home, but asks restaurant staff to cook the seafood on-site for her and eats at a dining area of the supermarket near her company.

"The supermarket impressed me a lot as I have never had such an experience before. If I am not willing to go out to dine, I can order online through an app and have it delivered within half an hour. Apart from seafood, I can choose meat, fruit, vegetables, dairy, bakery, wine and even flowers," Zhang said.

The brick-and-mortar store is the first offline fresh food supermarket owned by Chinese e-commerce giant JD. Covering an area of 4,000 square meters, it started official operations on Jan 4.

The rapidly growing number of China's high-income consumers has become a key driver of premium brands and other high-quality food products, especially imported meat and freshly caught seafood.

Major e-commerce companies have tapped into the fresh food sector, opening such supermarkets as well as investing in the supply chain and logistics infrastructure.

These stores integrate the online and offline worlds with logistics and data, enabling customers to shop, order groceries for home delivery and eat in-store－a one-stop food center experience. Various options are offered, including frozen seafood, meat, fruit and flowers.

Although experts said the fresh food supermarket is still in an initial stage and needs time to see whether the brick-and-mortar store can make a profit, the new model is already changing China's traditional retail sector.

"Fresh food is the most demanding category in e-commerce, and covers a range of fields including logistics, finance and users operation. But at the same time, it has huge market potential," said Lyu Haoze, an analyst of China E-Commerce Research Center.

Lyu added the online fresh food sector has entered a phase of reshuffling, and surviving enterprises are likely to see explosive growth.

Wang Xiaosong, the JD senior vice-president who runs 7Fresh, said the company will open more than 1,000 such stores across the country in the next three to five years.

Seventy-five percent of the products sold at the store are fresh products. As Chinese consumers are increasingly concerned about food safety and the product supply chains, JD said it has taken a series of measures to ensure the product quality.

"We have a special procurement team to source products from all over the world directly and ensure the quality of the products," Wang said.

They also have a product quality control team to verify the qualification of suppliers, and do a spot check on all products before they are put on the shelves, he added.

"For the traditional supermarkets, inventory turnover rate is more than 30 days. For us, it is shortened to fewer than four days－guaranteeing freshness of all products sold in the store," Wang said.